An Entity's Internal Control Requires That for Every Check Request

question 6

Multiple Choice

An entity's internal control requires that for every check request there be an approved voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select items for testing from the population of all

• A) Purchase orders.
• B) Canceled checks.
• C) Receiving reports.
• D) Approved vouchers.

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Definitions:

Subsidiary

A company that is completely or partly owned and partly or entirely controlled by another company, which is referred to as the parent company.

Upstream

In an industry context, refers to the exploration and production stages in oil and gas, or more generally, to processes or activities that occur at the beginning of a supply chain.

Consolidated Amount

The total sum resulting from the combination of various items, expenses, revenues, or financial statements.

Direct Approach

A method of presentation in cash flow statements where actual cash flow information from operating activities is presented directly.